Paragon Diamonds has raised £500 000 of unsecured debt financing for short-term working capital requirements while it progresses its acquisition of the Mothae diamond project in Lesotho from Lucara Diamonds.
The proceeds of the AIM listed, Lesotho diamond focused development company’ fundraise may be used to initiate a share buyback programme as well.
Mothae acquisition update
The Mothae acquisition is currently awaiting approval from the Lesotho Ministry of Mines. Paragon Chairman, Philip Falzon Sant Manduca, is scheduled to meet the Lesotho Minister of Mines on the 22 June 2015, specifically to request immediate approval for the Mothae acquisition, so that the company can commence production promptly.
This meeting follows multiple meetings between the Minister and Paragon’s MD Dr Stephen Grimmer, who has fully briefed the minister on the company’s prospective mining strategy for both Mothae and its Lemphane kimberlite project also in Lesotho and underlined the compelling cost efficiencies in operating both mines simultaneously.
The Paragon board anticipates the minister will grant approval promptly, especially as the company has, as previously announced, agreed in principle a US$26 million funding package with International Triangle General Trading LLC (ITGT) which demonstrates its ability to fund both mining projects simultaneously.
The funding package with ITGT remains subject to contract. Additionally, Paragon believes that the Lesotho Minister of Mines recognises that the two projects will create significant employment opportunities and will generate substantial revenues for the government following the granting of approval and the prompt commencement of production.
Share buyback programme
A share buyback programme enables any existing shareholders to exit if they wish. The board believes that the company’s stock is currently undervalued following the progress which has been made during the last 12 months, and in particular given the pending Mothae acquisition which, if approved, may contribute significantly to Paragon’s enterprise value when added to the company’s existing nearby Lemphane asset.